Kennedy wants to replace Clinton in the Senate; Jewish groups lost big in Madoff scheme.

Jews Hit Hard by Madoff Scheme

The New York Timesleads, and USA Todaygoes across its front page, with news that Caroline Kennedy is officially seeking to replace Hillary Clinton in the Senate. The daughter of President John F. Kennedy made a number of telephone calls to prominent New York Democrats yesterday, including Gov. David Paterson, expressing interest in the seat that was once held by her uncle, Robert F. Kennedy. Paterson insists he hasn't made a decision yet, but people close to the governor say it looks like Kennedy "has emerged as clear front-runner," reports the NYT. The Wall Street Journal leads its world-wide newsbox with the Illinois State House voting unanimously to begin impeachment proceedings against Gov. Rod Blagojevich. A bipartisan impeachment committee will begin meeting today and will gather evidence of any official misconduct.

The Los Angeles Timesleads with a look at how Bernard Madoff's alleged Ponzi scheme has hit Southern California's Jewish community particularly hard. Hollywood mogul Jeffrey Katzenberg has been added to the list of victims, which also includes some of California's biggest Jewish foundations. The Washington Postleads with a new poll that shows two-thirds of Americans are optimistic about U.S. prospects in Iraq, which marks quite a change from recent years. Still, most continue to believe the war is not worth fighting and that U.S. troops should be withdrawn within 16 months, as President-elect Obama has promised. While most Americans support the war in Afghanistan, a majority believe it isn't going well. Overall, Americans' opinions of the wars "appear to largely dovetail with the views expressed by Obama," notes the Post.

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Kennedy has shied away from public view throughout most of her life, but she catapulted herself into the political scene almost a year ago when she endorsed Barack Obama and compared him to her father in the heated Democratic primary. She was then part of Obama's vice-presidential search committee and was deeply involved in vetting potential candidates. Kennedy has hired political insiders to help and plans to visit parts of upstate New York in a move that the NYT notes "carries an unmistakable echo" of Clinton's "listening tour" that launched her campaign in 2000. Sen. Edward Kennedy, who is battling brain cancer, has apparently been encouraging his niece to seek the seat.

Although the battle for the Senate seat was already heated, the fact that Kennedy is now in the running has transformed the "competition into a much splashier affair, filled with visions of Camelot-on-the-Hudson and competition between two powerful clans: the Kennedys and the Cuomos," notes the LAT. New York Attorney General Andrew Cuomo is also interested in the seat. (Trivia lovers might remember that Cuomo went through a messy divorce with one of Kennedy's cousins in 2003.) While Kennedy clearly has name recognition going for her, some are openly wondering whether she's qualified. But as of now, Paterson seems to believe she could be a strong candidate who has enough connections to raise the money needed to win in 2010 to finish out Clinton's term and again in 2012. Besides, appointing Kennedy could clearly be good for Paterson, who came into office after Eliot Spitzer resigned and must run on his own in two years. "The upside of her candidacy is that the 2010 ballot will read Kennedy-Paterson," an anonymous Paterson adviser tells the NYT. "David craves national attention and money. If you connect the dots, it leads to her."

Although Madoff's victims that have been identified so far "are a diverse lot," news that Jewish organizations have suffered huge losses suggests "a so-called affinity scam, in which members of a perpetrator's ethnic or religious group are targeted," notes the LAT. And it's not just in California. The Jewish Federation of Greater Washington, for example, said it had $10 million invested with Madoff. "In the Jewish world, we've just taken a major, central player, and introduced fear and uncertainty all over the system," the president of a group that studies Jewish philanthropy tells the WSJ. "It's like finding out your brother is a murderer." Foundations across the country will suffer from the Madoff's scheme, and some, including the JEHT Foundation, have already announced they'll be closing down. And as the NYT details in its front page, the nonprofits that depended on money from the affected foundations are struggling to figure out whether they'll be able to make ends meet without their usual benefactors.

The Madoff scandal is the "latest black eye" for the Securities and Exchange Commission, notes the NYT. As the WP details in its business pages, financial advisers have long been raising doubts about Madoff's practices and one letter sent to the SEC in 1999 accused him of running a Ponzi scheme. But despite all these red flags, the SEC conducted its first full examination of Madoff's investment business last week.

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Still, the SEC is hardly alone in having missed the red flags. In a detailed look at Madoff's operations, the WSJ says that now that more experts have started picking apart his investment strategy, it's becoming increasingly clear that the banks and investment advisers who directed clients to Madoff should have known that something wasn't quite kosher. Although his strategy made sense on its face, it would have been impossible to carry out with the amount of money he was managing. The WSJ does an admirable job of explaining complicated financial transactions, but one of the obvious red flags is that the trades Madoff claimed to be doing simply weren't showing up in the options market. Investors who asked were told the firm carried out trades "over the counter," away from official exchanges, but it's unclear whether that market is big enough to support the kind of volumes that Madoff was reporting. Plus, investment experts should have known that while the options strategy Madoff used can typically provide a safe, steady investment in the long-run, it would normally not produce gains in a declining market. But Madoff always seemed to be able to pull off small gains each month for his clients.

While the Illinois State House began the process to impeach Blagojevich, Obama announced that his team's review of contacts with the governor didn't find anything improper but said he won't release the report until next week at the request of federal investigators. "I would ask for your patience because I do not want to interfere with an ongoing investigation," Obama said. Lawyers say U.S. Attorney Patrick Fitzgerald can't force the president-elect to stay silent, and some speculate Obama's team simply wants to release the report on Christmas week to make sure it doesn't get much coverage.

In transition news, everyone notes that Obama will nominate Arne Duncan, the Chicago schools chief, as his education secretary. Duncan is widely seen as a compromise choice because he's someone who hasn't been shy about punishing underperforming schools while keeping relatively good relations with teachers. Duncan has been friends with Obama for more than a decade. In addition, there's word that Obama has chosen Sen. Ken Salazar of Colorado to lead the Interior Department.

The LAT, WP, and NYT front a look at how the Iraqi journalist who threw his shoes at Bush on Sunday has become an overnight celebrity in much of the Middle East. The LAT calls Muntadar al-Zaidi, the Middle East's "own version of Joe the Plumber." Some Iraqis have been quick to express their displeasure at Zaidi for his failure to respect a guest. But many in the Middle East see Zaidi as a hero and there were demonstrations in Iraq to demand his release. The television network that employs Zaidi posted his picture on a corner of the screen for much of the day and demanded his release. As the LAT details, Iraqi Prime Minister Nouri al-Maliki is now in a no-win situation. If he chooses to come down hard on the 29-year-old journalist, he would anger many and turn Zaidi into a martyr, but to simply set him free would amount to ignoring a very public act of aggression on a visiting head of state.

Procrastinators rejoice! If you've put off buying an airline ticket for the holidays, you could be in luck. USAT reports that the recession has caused such a plunge in holiday travel that airlines are now offering discounts after more than a year of increasing fares. "I haven't seen a holiday season like this since 9/11," one expert said.

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.